A SALES SURGE FOR DIGS OVER $1M

07/19/07 by
WK Real Estate

A sales surge for digs over $1M
In most price categories, sales fell, but for the wealthy with a big "W," the housing market's their oyster - pearls included.
By Margaret Jackson Denver Post Staff Writer 303-954-1473 mjackson@denverpost.com
Article Last Updated: 07/19/2007 05:45:08 AM MDT
Lindsay Filsinger, for four years a resident of Denver's Hilltop neighborhood with her husband, Todd, and their two children, is trading up to a $2.5 million home just two blocks from their current one. The couple wanted the new home's three-car garage, outdoor kitchen and customization. (Post | Hyoung Chang)
Four years after moving into their million-dollar home in Denver's Hilltop neighborhood, Lindsay and Todd Filsinger are trading up.
The couple is paying $2.5 million for a home just blocks from where they now live with their two children.
The Filsingers are among the buyers contributing to a dramatic increase in sales of homes priced at $1 million and up. That segment of the Denver-area housing market is thriving even as the lower price ranges languish.
A record 409 homes priced at $1 million and higher sold during the second quarter this year, up 25 percent from the same period in 2006, according to an analysis by DataQuick Information Systems. The analysis included Adams, Arapahoe, Boulder, Denver, Douglas, Jefferson and Weld counties.
Sales of homes priced at over $1 million increased 22 percent between January and June compared with the same period last year. But sales declined - in some cases dramatically - in nearly every other price range, according to the analysis.
Overall, sales this year are down 10.4 percent compared with 2006.
"The very wealthy in this country are doing very well," said John Karevoll, real estate analyst with DataQuick. "The rich are getting richer and the rest of us aren't."
Sales of high-end homes have skewed the average sales price for the metro area higher, propelling it to near-record levels even though the overall market is down. The average price for a single-family home in the metro area during the second quarter was $298,959, compared with $296,652 during the same period last year.
The median price was $235,900, down from $240,000 a year ago. The number of sales in the $200,000 to $300,000 price range plunged nearly 17 percent from a year ago.
Brisk sales in the million-dollar-plus market are not an indication of a housing recovery.
"Sometimes that market behaves in tandem with the rest of the market, but very often it doesn't," Karevoll said. "Those who are in that market don't respond the same way to market trends the way the rest of us do. You're not talking about paycheck money here. You're talking about wealth with a capital W."
When high-end sales priced under $1 million start popping, it can be a sign of good things to come because the impacts will slowly begin to trickle through the rest of the market, Karevoll said.
But sales in nearly all price ranges below the $1 million mark are down significantly.
Dow's surge fuels sales
The strength of the high-end market in Denver isn't unique. Cities from Boston to Seattle are experiencing a similar surge. In Boston, sales of homes over $1 million are up 14.9 percent, while those less than that are down 2.8 percent. In Seattle, high-end home sales are up 21.3 percent, while those under a million are down 13.8 percent.
"The very wealthy, high-income households are doing well," said Mark Zandi, chief economist for Moody'sEconomy.com. "Their finances are very strong. They're benefiting from the run-up in stock prices. They're getting big pay increases, and they have no debt."
But some real estate agents don't even consider $1 million to be high end any longer.
Rollie Jordan, a broker with The Kentwood Co. in Cherry Creek who specializes in high-end homes, recalls the days when a listing for more than $4 million was considered pricey.
"Now, there's $10 million to $12 million houses on the market," Jordan said. "The new things coming out of the ground in Cherry Creek are from $700 to $800 a square foot."
She's selling a house for more than $1 million that the buyer plans to demolish.
"The average price for a single-family home in Denver is so high that $1 million is not high end any more," Jordan said. "The high end is getting much higher."
Moving for a wine cellar
In the downtown market, the definition of high end has changed as well, but not as dramatically as in the surrounding areas.
Dee Chirafisi of Kentwood City Properties said $500,000 used to be considered high end, but now it's $1 million and over.
"Ten years ago, we wouldn't have had one $1 million sale downtown," she said. "In June, we had more sales over $1 million than we've ever had in one month."
The collapse of the subprime mortgage market has adversely affected the lower price ranges but hasn't touched the high-end market, which is largely driven by cash or fixed-rate mortgages, Zandi said.
For the Filsingers, buying a high-end home was a matter of getting exactly what they wanted.
"It was originally a spec house," Lindsay Filsinger said. "We got in soon enough that we could get in and customize some things. That was appealing to us, rather than starting from scratch."
They were looking for features like a three-car garage, bigger basement, multiple dishwashers, outdoor kitchen and fireplace, and a wine cellar - things their current Hilltop home, on the market for $1.5 million, is lacking.
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